But, some people told me, if city involves, they will destroy all the walls and might set a fine because I did not ask for permit and all the works he had done are wrong.

Another option is to go ahead and get involved with Keller Williams or Coldwell Banker.

Second is if you have a problem with that room resulting in a lawsuit then I bet they look to see if the room was up to code, say like an a electrical fire.

Analysis:Rental of Other Property Not Securing the VA Loan Rental income verified as stable and reliable may be included in effective income.If there is little or no prior rental history onthe property, make a determination based on review of: documentation of the applicant’s prior experience managing rental units or other background involving both property maintenance and rental any leases on the property, and the strength of the local rental market.

Add that to your documentation.If illegal drugs are involved, it might be worth your time to contact your local law enforcement.

Form 4684 will be involved, that's for sure.And you already know that I will suggest getting professional help.

Regardless, I would NEVER involve the insurance company unless there was significant damage to the house. 

@Felix L PerezIt is okay if you are not proficient in tax - you can easily hire a tax accountant to help you.I am not good at plumbing and I would never dare to try to fix my plumbing issues.If you are involved in a flip that you acquired the property in 2018 - there won't be any benefit that you can use to do on your 2017 return.Expenses that are ordinary and necessary are deductible.

This is a more complicated strategy that involves the use of a non-recourse loan for the IRA, as you may not pledge a personal guarantee. 

What are the other cost involved beside the development cost.Any help would be appreciatedThanks